CHINA: An Introduction to Corporate/M&A (PRC Firms)

Focus: Key Initiatives for China M&A

In the first half of 2024, a series of pivotal policies were introduced, including the Opinions on Strengthening Regulating, Preventing Risks, and Promoting High-Quality Development of the Capital Market, as well as the Eight Measures to Deepen the Reform of the STAR Market to Support Technological Innovation and the Development of New Productive Forces. These initiatives fostered significant momentum in mergers and acquisitions (M&A) activity across various industries in China, particularly among listed companies.

On 24 September 2024, the China Securities Regulatory Commission (CSRC) further issued the Opinions on Deepening Market Reform for Mergers and Acquisitions of Listed Companies (the “Six Measures for M&A”), offering innovative solutions to the key challenges currently faced in M&A activities involving listed companies. On the same day, CSRC also released the Administrative Measures for Material Restructurings of Listed Companies (Draft for Public Comment) (the “Restructuring Measures”), further aiming to support the healthy development of M&A activities from a regulatory standpoint.

This article highlights several key initiatives outlined in the Six Measures for M&A, providing a concise introduction to and analysis of core aspects of these new policies.

Supporting cross-industry mergers and acquisitions

In the capital markets, listed companies often encounter significant challenges that necessitate cross-industry mergers and acquisitions. For example, players in traditional industries experiencing slow or stagnant growth may need to pursue industrial transformation and “upgrade” themselves to remain competitive. Similarly, companies that have reached a bottleneck in their existing operations may seek to diversify and develop new business lines as a secondary growth avenue. In this context, the Six Measures for M&A explicitly support cross-industry M&A activities to facilitate industrial transformation, upgrading, and the development of a second growth curve. However, it is important to note that the policy encourages strategic diversification rather than blind or speculative expansion. This balanced approach ensures that M&A activities contribute to the long-term sustainability of both listed companies and the market.

Supporting acquisitions of high-quality but non-profitable business

Non-profitable businesses should not automatically be considered bad or low-quality assets; they are simply assets that have yet to achieve profitability. As the Chinese proverb goes, “the tasty orange, growing in southern China, would turn sour once it is planted in the north”. Context is everything, and the success or failure of the same assets can vary greatly depending on who manages them and how they are utilised. The Six Measures for M&A propose relaxing regulatory requirements for acquiring non-profitable businesses, thereby offering strategic investors opportunities to access potentially high-value assets that have not yet reached profitability. However, this relaxation is accompanied by safeguards. Specifically, acquisitions of non-profitable businesses must meet the following conditions to ensure they benefit the acquiring company:

• the acquisition must not compromise the listed company’s ability to continue operations;
• it must serve reasonable and strategic business purposes, such as enhancing or completing the company’s industrial chain, or introducing key technologies that are critical for the company’s future growth; and
• there must be appropriate arrangements to protect the interests of minority investors.

Therefore, it is crucial for listed companies to conduct thorough evaluations of factors such as operational scale, financial strength and the potential impact of target assets on their business development. They must ensure that acquiring non-profitable businesses will transform these targets into high-quality, profitable resources that add long-term value to the purchasing company.

Linking the private equity investment period to the share lock-up period

To encourage private equity funds to provide early-stage financing to smaller-scale ventures, the Six Measures for M&A introduce an innovative approach to reduce exit pressure. This approach establishes a reverse linkage between the investment periods of private equity funds and the lock-up periods for shares acquired by these funds through restructuring. Essentially, this initiative allows for greater flexibility in the timing of exits by private equity investors, encouraging them to adopt a longer-term perspective on their investments in smaller ventures with high growth potential.

The accompanying Restructuring Measures, released alongside the Six Measures for M&A, clarify that if private equity funds acquire shares in a listed company by selling target businesses and their investment period in the target business exceeds five years, the lock-up period for these acquired shares will be reduced from 12 months to just six months. This policy adjustment is designed to promote the healthy development of private equity investments, particularly in ventures that require longer-term commitment and investment to realise their full potential.

Allowing more valuation methods

The price for acquisitions is typically determined based on the valuation of the target businesses, making the choice of valuation methods a critical factor in the success of any acquisition transaction. Recognising the importance of accurate and fair pricing, the Six Measures for M&A explicitly support the use of multiple valuation methods to negotiate transaction pricing. These methods include the asset-based approach, income approach, and market approach, each providing different perspectives on the value of the target assets. The Six Measures encourage a multi-dimensional evaluation process that considers various factors, such as the target company’s business model, research and development investments, performance growth, valuations of comparable companies within the same industry, and pricing data from similar transactions. This approach reflects a regulatory attitude that embraces flexibility in valuation practices, allowing for a more comprehensive and balanced assessment of a target’s worth.

Enhancing payment flexibility and streamlining review processes

Traditionally, the consideration for acquiring listed companies has been paid in cash or through the issuance of new shares in the acquiring company. Additionally, these transactions are subject to lengthy and sometimes cumbersome review and filing processes. The limited payment options, combined with extended regulatory procedures, often create significant delays and challenges for parties involved in the acquisition process. To address these issues and facilitate smoother M&A activities, the Six Measures for M&A outline several key initiatives to enhance payment flexibility and improve the efficiency of the review process. These initiatives include:

• encouraging the comprehensive use of various payment tools, such as shares, directed convertible bonds, and cash, in M&A transactions to provide more flexibility in deal structuring;
• establishing an instalment payment mechanism for share-based consideration in acquisition restructurings, allowing for more flexibility in how payments are made over time; and
• implementing simplified review procedures for certain types of restructuring transactions, thereby reducing the regulatory burden and accelerating the approval process.

These measures aim to streamline the acquisition process, create a more dynamic and efficient M&A market, reduce administrative delays, and enable businesses to execute transactions more effectively.

On the same day that the Six Measures for M&A and the Restructuring Measures were announced, both the Shanghai Stock Exchange and the Shenzhen Stock Exchange released drafts of the Rules for the Review of Material Restructurings of Listed Companies for public comment. The stock exchanges have been actively supporting and promoting these policies by organising seminars with market participants and engaging in discussions with listed companies. This collaborative approach ensures that the new measures are effectively understood and implemented across the market.

Additionally, local governments have introduced corresponding action plans to align with the Six Measures for M&A. For instance, on 27 November 2024, Shenzhen released the Action Plan for Promoting High-Quality Development of M&A and Restructuring (2025–2027) for public comment, and on 10 December 2024, Shanghai unveiled the Action Plan for Supporting M&A and Restructuring of Listed Companies (2025–2027). These action plans reflect a co-ordinated effort to create a favourable environment for mergers and acquisitions in the coming years.

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We anticipate that the introduction of these M&A-related regulations and action plans will serve as a “booster shot” for the M&A market, guiding the capital markets toward a more regulated, efficient and vibrant development path.

聚焦：并购六条的核心举措

伴随着于2024年上半年新颁布《关于加强监管防范风险推动资本市场高质量发展的若干意见》、《关于深化科创板改革服务科技创新和新质生产力发展的八条措施》等政策的相继发布，中国各行各业，尤其是上市公司的并购项目的活跃度正在持续升温。

9月24号，中国证券监督管理委员会（“证监会”）更是颁布《关于深化上市公司并购重组市场改革的意见》（“并购六条”），对现阶段上市公司并购中的核心难点提出针对性和创新性的解决意见；同日，证监会还配套发布《上市公司重大资产重组管理办法（征求意见稿）》（“重组办法”），进一步从监管角度助力上市公司并购的蓬勃发展。

本文节选了并购六条中的若干核心举措进行简要分析和说明，以方便各位能够快速理解并把握该政策要点。

支持跨行业并购

实操中，上市公司对于跨界并购存在合理需求，例如一些传统行业发展滞后，该行业内的上市公司寻求产业转型升级；或者，现有上市公司主营业务进入发展瓶颈期，希望开拓新业务线以寻求第二增长曲线。证监会通过并购六条重申支持上市公司围绕产业转型升级和发展第二增长曲线的跨行业并购，并非支持盲目跨界。

支持收购优质未盈利资产

其实未盈利资产未必是坏资产或差资产，它只是尚未盈利。俗话说“橘生淮南则为橘，橘生淮北则为枳”，同样的业务和资产，在不同的人手中运营会有不同的结果。并购六条提出放宽对于收购未盈利资产的监管要求，但并非毫无条件，该等并购需要：(a)收购亏损资产不影响上市公司的持续经营能力；(b)具备补齐或强化产业链、引入关键技术等合理商业目的；及(c)需设置中小投资者利益保护相关安排。因此，上市公司需要结合其经营规模、资金实力、被投标的对于上市公司业务发展影响等多方面因素充分论证收购标的虽然是未盈利资产，但该等收购能够给上市公司带来优质资源。

私募基金的投资期与锁定期反向挂钩

为鼓励私募基金“投早、投小”以孵化优质标的，并购六条提出对私募投资基金投资期限与重组取得股份的锁定期限实施“反向挂钩”。具体而言，配套的重组办法提出对于以资产并购而取得上市公司股份的私募基金，若其对标的资产的投资期超过5年的，其通过本次交易取得的上市公司股份的锁定期从12个月缩短至6个月。

支持多元化评估方式

并购六条明确规定：“支持交易双方以资产基础法、收益法、市场法等多元化的评估方法为基础协商确定交易作价。综合考虑标的资产运营模式、研发投入、业绩增长、同行业可比公司及可比交易定价情况等，多角度评价并购标的定价公允性”，传达了增强估值方法包容性的监管态度。

提高支付灵活性和审核效率

过去，上市公司并购对价支付方式相对有限，还受限于冗长的审批和备案机流程，以至并购方“负重前行”。为此，并购六条就此提出三个要点：(a)鼓励综合运用股份、定向可转债、现金等支付工具实施并购重组；(b)建立重组股份对价分期支付机制；(c)建立重组简易审核程序。

并购六条和重组办法发布同日，上海证券交易所和深圳证券交易所也分别发布对应的上市公司重大资产重组审核规则的征求意见稿，后续也通过组织座谈会、约谈上市公司等方式宣传政策理念和监管态度。各地政府也围绕着并购六条陆续推出配套行动方案：11月27日，深圳发布《深圳市推动并购重组高质量发展的行动方案（2025-2027）（公开征求意见稿）》；12月10日，上海发布《上海市支持上市公司并购重组行动方案（2025—2027年）》。我们由衷希望这些并购相关政策和行动方案的陆续出台能够给并购市场打一剂“强心针”，引导资本市场规范且蓬勃地发展。